Here’s How AI Could Supercharge Stocks And The Economy

Everyone says AI is going to be transformative, turbocharging the economy and pumping up profit margins. But they don’t necessarily say how.

And the truth is, this tech is going to play out differently across various sectors, as you can see from the chart. But if you’re wondering how it’s going to impact a company you like, consider the fact that all these effects boil down to three themes:

Production power-up. AI’s magic is in helping people produce more, with less: in other words, it can enhance human abilities or help create brand-new innovative products and services. Take Amazon, for example: by leveraging AI to get a deeper insight into customer behavior, to predict demand more accurately, and to supercharge ad conversion rates, the company is set to maximize sales per customer. Plus, with robots and AI streamlining its supply chain, it’s on track to enhance efficiency, slash costs, and fatten up its profit margins. Of course, the perks aren't exclusive to multibillion-dollar companies: thanks to AI, virtually anyone, anywhere can access the information and tools needed to bring ideas to life, whether it’s an app, online content, or products to ship around the world.

Consumption boost. ChatGPT's meteoric rise to 1 million users in a mere five days tells you everything you need to know about the appetite for truly useful AI. But this AI boom is about more than just AI-focused products: it’s about AI's potential to craft high-quality, flexible, and custom-made products that consumers can't resist. Imagine having your own virtual assistant to tackle all your admin tasks, a personal portfolio manager on standby 24/7, or a personal AI tutor that will make sure you’ll pass your next exam. Who could resist that?

Positive ripple effects. AI's potential benefits extend beyond the obvious. Think: better education, enhanced accessibility, improved safety and security, superior healthcare, and environmental perks. These indirect benefits could trigger even more advantages. For instance, a healthier workforce could be more motivated, happier, and more productive. Tools for people with disabilities could enhance their capabilities and quality of life, and empower them to make even greater contributions to society. A better informed, savvier populace will likely dodge costly missteps in planning, investing, and lots of other areas.

So, AI isn't just your handy sidekick for whipping up your next email in a jiffy (though it is that too). Its perks are poised to permeate various parts of the economy, potentially snowballing into even greater benefits over time. It’s no wonder the investment proposition is such a compelling one.

You can read about how to invest in AI here, and how AI will impact the S&P 500 here.